Bank of America defends $5 debit card fee

Reports say the bank has started lobbying Congress and federal regulators to keep its planned fee intact.

By Kim Peterson Oct 7, 2011 5:24PM
Bank of America (BAC) knows customers are furious over plans to charge debit card users a $5 monthly fee. So it's taking steps to make sure that fee doesn't get derailed.

The bank has launched a massive lobbying effort to support the fee, Fox Business reports. The bank is contacting members of Congress as well as the new Consumer Protection Bureau to explain the logic behind the fee.

It may take some convincing to keep the Consumer Protection Bureau off of its back. The bank is worried that the consumer bureau might try to force a reversal of the fee, reports Charlie Gasparino. "Because of all the new regulations, we lost lots of revenues and these fees only partially make them up," a bank executive told Fox Business.

What regulations? The banks say a new cap on the fees it charges retailers and other vendors is going to hurt. Starting Oct. 1, the maximum fee merchants will pay is 24 cents per debit transaction. Prior to the change, the current average was 44 cents, based on the $38 average debit purchase.

The new caps mean banks are out billions. Bank of America alone will see its annual revenue drop by $2 billion. The bank says the new $5 monthly fee for debit card users will restore some of that money.

The fee has provoked outrage from many Bank of America customers, and some have switched banks. The bank's website was down for several days this month, which didn't help customer loyalty one bit.

So will all that lobbying rein in the Consumer Protection Bureau? We'll see.

Tags: BAC
88Comments
Oct 7, 2011 7:01PM
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Go ahead and leave BofA, all other banks are gonna follow suit pretty soon as well! BofA, is the biggest bank and with the most media attention this days ....what are you going to do when your bank starts charging you a fee? Change again? Go out of your little town, does your CU has a bank everywhere like BofA? $3 a pop adds up pretty quick for taking out your $$!  Penny smart .... Dollar foolish in my eyes! Smile
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B of A charging a fee FOR  YOU the customer to use YOUR own money, yeah that makes lots of sense. Pull your money out and put it into a Credit Union. No one should charge a fee for a person to use their own money, and that is exactly what they are doing. Hipporcrits and Unamerican!!
Oct 7, 2011 6:56PM
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  Look guys lets let capitalism work....When we all close our accounts at B of A  they will go out of business and well put the other banks on notice that with interest being pain on savings we might just quite using banks period..for the average joe money orders are used extensively now anyway...

 

 

 

 

 

 

Oct 7, 2011 6:56PM
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BOA should market their pricey services to the Tea Party crowd. Those guys will do anything the Wealthy tell them to do.
Oct 7, 2011 6:55PM
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Just wait, it's coming.  Word is out in the banking industry that all of the major banks will stop their free checking and free debit cards sometime next year.  On the other side of the coin, if I didn't have internet banking to pay bills and had to write checks for every retail transaction, I'm sure I'd spend more than $5 on stamps and checks.  They got us all hooked on our debit cards and now we pay for the convenience.
Oct 7, 2011 6:53PM
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Help the banks with their market research and close your account.

When the see all the swipe fees tell lose the will stop charging fees

also contact your congress person and tell them $5 should be limit for overdraft fees.

$35 fee for overdrfat fee is stealing from customers

The bank repost your transactions from highest to losest so the can charge you more then 1 overdraft bank should be charged with Wire fraud for this! They shold Send the Bank officers to prision for this! IE you get a coffe in the morning for 2 or 3 bucks then luinch for about $5 on the way home from work you get a flat and have the tire changed causing a over draft on your account.

but the bank post the new tire first then hits you up for 2 more overdrafts! This is wire fraud and the persons responsable shoudl go to prision

Oct 7, 2011 6:50PM
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The use of a Debit Card avoids the manual transaction of processing  written checks & the use of tellers which saves  BOA  labor costs. Paying for the use of my own money is morally wrong when they loan it out and make more money  off of it. 
Oct 7, 2011 6:47PM
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@ r3r8girlz ....... When I first heard about this, I started calling other banks and credit unions, there wasn't a single one that did not have a free checking account AND free check card use with a list of conditions.  In fact, a majority of the banks and credit unions didn't even have any way whatsoever to have a FREE check card AND checking account.

 

There isn't a single doubt in my mind that other banks will follow, if they haven't done so already or even before B of A decided to do this.

Oct 7, 2011 6:46PM
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They cannot in good conscience defend the debit card fee. It's just pure greed on their part.

They already make billions on client account interest that they don't pay to their customers, so it is just pure greed on their part. People should take their money out and leave BOA for better Customer Service.

Oct 7, 2011 6:45PM
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I stopped using the "big" banks years ago and haven't been happier.  My local credit union takes GREAT care of me, has no stupid fees, and best of all, they don't report to Wall Street!  Banks are businesses, and businesses are entitled to a profit - but with banks, you can choose your bank!  Just leave 'em, people!  They show you no mercy when they were making BILLIONS off your home loans, why should you worry about them now? 
Oct 7, 2011 6:44PM
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So apparently laying off 30,000 workers won't offset the regulated fee reduction on the debit card transactions?  They "need" to charge a $5 per month fee for people who actually use their debit card for purchases?  Wow, I am not sure who is a greater danger to consumers, B of A, or the US Congress?  FWIW, as a former employee of a bank that was taken over by Bank of America, I left the big banks decades ago, and am quite happy with my local community bank that still portfolios the mortgage loans it makes and actually allows borrowers to talk to the same loan officer that they got their loan from.  What an archaic concept!  A well run, conservative BANK!
Oct 7, 2011 6:43PM
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Guess what, everyone....BoA isn't the first bank to implement this, they were just stupid enough to lay it all out there first.. Chase and Wells Fargo have been doing 'market research' in several areas around the country charging flat monthly fees for debit transactions and have every intention of moving forward.    None of these big banks can think for themselves.  They all operate on a monkey see, monkey do platform.  My husband worked for 15 years at Chase and is now with BoA. (He wants out of banking, but a job is a job at this point.) If one bank does something that may produce some revenue, they all follow suit.  They even go so far as to copy each others employee comp plans no matter how wrong a fit it is for the situation.  No matter what big bank my husband has been employed with, we have always stuck with our small local bank.
Oct 7, 2011 6:39PM
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.....which very likely is what the bank analysis came up with.....that's likely the root cause WHY they came up with the $5 fee.  expect to see this come to ALL the banks next. 

 

merchants will now raise their prices......so nice to see smart comments come from a "reader comment".  no doubt the reporters know nothing of this info unless they accidently read these comments themselves. 

Ultimately, if you paid the $5 per month and continued using your check card, the bank would get less revenue from you than if you switched to using credit cards, even if you pay your balance in full each month.
Oct 7, 2011 6:36PM
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This reminds me from the seen from Goodfellas where Roy Liota's Character was discussion what would happen if you barrowed money from the Boss "Pauly"

 

"Your not doing business, F-you pay me, you can't make your mortgage, F you, pay me, you're wife left you, F you, pay me!

 

That's B of A. They are like mobster bosses that just want their money no matter what.

Oct 7, 2011 6:31PM
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A recently leaked internal memo reveals that Bank of America has instructed all of its branch managers to check on a weekly basis under the cushions of lobby furniture for loose coins.

Oct 7, 2011 6:31PM
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Note: Before any of you are tempted to say I do not know what I am talking about, I work in the credit card processing industry.

 

This whole situation is ludicrous.  Check out this absurd progression:

 

1) Regulations reduce/cap fees on debit transactions paid by merchants.

2) Banks lose revenue so they come up with fees on accounts and debit card use.

3) Account holders get pissed off so they switch to credit cards, checks or cash.

4) Credit cards are now used by customers to pay for purchases that they once used debit cards for.

 

Number 4 is the sticking point.  Where check card users once paid with PIN-based debit transactions which cost a maximum of $.65 per trans or signature based debit transactions that cost about 1.5% they will begin using rewards cards which will cost merchants as much as 3.5% per transaction, and in some cases more.

 

What was designed to cut down on card processing fees paid by merchants may in fact cost merchants more money than before and increase revenues from credit card transactions for card issuing banks.

 

Not to mention that with increased use of credit cards comes increased revenues for banks from interest and account fees.

 

Ultimately, if you paid the $5 per month and continued using your check card, the bank would get less revenue from you than if you switched to using credit cards, even if you pay your balance in full each month.

 

 

 

Oct 7, 2011 6:25PM
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Yep, went out today and opened up an account at our local credit union. Bye Bye BofA
Oct 7, 2011 6:22PM
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I stopped dealing with the big banks years ago, and split our money over a few different credit unions. it's nice to be able to walk in and have people address you by name, someplace where your more than a number. seems to me when enough people get tired of all BOAs garbage and pull their accounts that they can charge $5 as many times as they want, but a 5 dollar fee don't get them anything if they don't have any accounts. We should have let the big banks fail instead of bailing them out. They are just like children, and they won't learn anything if mommy and daddy come to their rescue every time. 
Oct 7, 2011 6:16PM
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Notice that they said "its annual revenue drop by $2 billion", not that they will lose money on every transaction.  The law is meant to protect consumers from excessive fees.  Wonder what the profit margin is on those new fees?
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